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Li & Fung
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Li & Fung sees more disruptions to global supply chains from US friction with trading partners, as its interim results miss estimates

  • Li & Fung’s turnover dropped 8.4 per cent to US$5.4 billion, while core operating profit fell 18.6 per cent to US$105 million during the first half
  • The company reported an interim net profit of US$21 million, swinging from last year’s US$86 million loss.

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Li & Fung’s turnover dropped 8.4 per cent to US$5.4 billion. Photo: Edmond So
Eric Ng
Li & Fung, the world’s biggest supplier of consumer products, said ongoing adjustments in global supply chains could be disrupted by new spats between the United States and its trading partners, further complicating the commercial relations that have taken decades to build.
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“While the US-China tension has taken centre stage now, uncertainties also loom between the US and multiple production countries, which may cause new disruptions in the future,” said the Hong Kong company’s chairman William Fung Kwok-lun, after interim results missed estimates. “We expect a realignment of global trade relationships to happen over the course of many years, and that a new, stable norm will take time to emerge.”

Li & Fung’s turnover dropped 8.4 per cent to US$5.4 billion, while core operating profit fell 18.6 per cent to US$105 million during the first half. The company reported an interim net profit of US$21 million, swinging from last year’s US$86 million loss. The company declared an interim dividend of HK$0.01, down from last year’s HK$0.03.
The century-old Hong Kong company, founded by Fung’s grandfather Fung Pak-liu, was a beneficiary of China’s rapid rise as the world’s factory, supplying global consumers with everything from clothing and apparels to shoes, toys and furniture. Its earnings slump is emblematic of the city’s economic position, which is being challenged by the year-long US-China trade war, as China-based manufacturers shift their production to Southeast Asia and elsewhere to skirt America’s tariffs.

Still, while supply chain shifts have disrupted the company’s business and partners in manufacturing and retail, Fung said they also presented opportunities.

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“While the continued uncertainty presents big challenges to the global retail supply chain, it can also present us with an opportunity,” he said.

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